The Department of Education released its proposed rule updating its Income Driven Repayment program to make student loan payments more manageable for borrowers moving forward.
“We’re doing this because we have to get a handle on the issue that we’ve seen for decades, college costs going up, financial aid going down and the result is student debt is stopping college graduates from getting into the middle class,” said James Kvaal, Under Secretary of Education, U.S. Department of Education.
The regulations fulfill the commitment President Biden laid out in August when he announced his Administration’s plan to provide student debt relief for approximately 40 million borrowers and make the student loan system more manageable for student borrowers.
“It’s becoming hard for them to buy a home or start a family. We need to confront this issue head on so that’s why we’re proposing a new student loan prepayment plan that would be the most generous ever that would create a real safety net to make sure student loans are affordable for borrowers,” Kvaal said.
The Biden-Harris Administration is also committed to ensuring postsecondary institutions and programs are held accountable if they leave borrowers with unaffordable debts.
There are a series of steps that the Department of Education is doing to increase accountability over colleges not to allow for excessive debt.
“Well we’re doing two things, one, today we are publishing a request for help to define the problem issues with debt. We want to make sure we have the right data to figure out where all this unaffordable debt is coming from. We think it’s time to name names and have a frank conversation about the sources of the problem and figure out how to hold these colleges accountable for making sure that loans are affordable,” said Kvaal.
“The second step is going to come this spring and it has to do specifically with for-profit colleges and career colleges. Those are the places that disproportionately produce large loans per career, resulting in high loan defaults and in those cases we’re going to identify low value programs and cut them off. So that students won’t be duped into taking out loans for a program that’s not going to lead to a good job.”
Borrowers can go to Ed.gov for details on the plan.
“Our goal is to finalize the plan and start to deliver some of the benefits this year,” said Kvaal.